Saturday, 6 February 2010

The basic positions on tax could hardly be more different: virtuous tax competition or criminal tax fraud?

The official Swiss view is that tax competition is healthy. Not only do federalism and [direct] democracy promote sound public finances, but they also enhance trust between citizens and the state, said then President of the Confederation (Bundespräsident) Hans-Rudolf Merz in a lyrical speech 2 November 2009: Die Schweiz im internationalen Steuerwettbewerb.

The European Union and its Member States face serious challenges in addressing the current economic and financial crisis. The crisis has exacerbated concerns about the sustainability of tax systems in the face of globalisation. The promotion of good governance in the tax area on as broad a geographical basis as possible is now recognised to be the appropriate way of addressing these concerns. It balances the tax sovereignty of individual countries with the legitimate protection of tax revenues.

Accordingly, the EU and its partners have a strong common interest at this time in promoting tax cooperation and common standards on as wide a geographical basis as possible. The time is now right for Member States and third countries to work together and to encourage and support the move that has now started towards a broader acceptance of international standards of tax co-operation

This Communication presents for consideration a series of steps to promote good governance in the tax area, entailing action both within and outside the EU and both at EU and at individual Member State levels. ---

The third major political EU institution is the Council. In the pipeline is a draft Council decision (document 16308/09; only partially declassified 6 January 2010) to authorise the Commission to open negotiations between the EU and its member states with the Swiss Confederation to combat direct tax fraud and direct tax evasion and to ensure administrative cooperation through exchange of information on tax matters. (Negotiations are also foreseen with Andorra, Monaco and San Marino.)

Switzerland and Germany

There are also bilateral issues between individual EU member states and Switzerland. The most visible right now is the potential circumvention of the legendary Swiss banking secrecy contemplated by Germany through buying stolen bank data.